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byline: Joan Tupponce

A new model

Last year, Virginia Beach inked a deal for an arena that it hopes will grab the attention of top entertainers as well as a major sports team looking for a new home. “It will be the largest arena in the state,” says Warren Harris, the city’s director of economic development.

The $200 million project planned by United States Management LLC (USM), includes an arena with seating for more than 15,000 people. The city will put up $78 million for infrastructure improvements and lease the land for 60 years to USM, an affiliate of The ESG Cos., a Virginia Beach development company.

“The closest arena in size would be the John Paul Jones Arena in Charlottesville [which has slightly fewer than 15,000 seats],” says Andrea Kilmer, the president and CEO of ESG. “Virginia Beach is a natural stop between Washington, D.C., and Raleigh, two markets that do have facilities large enough to accommodate top acts.”

Kilmer believes the new venue will help Virginia Beach attract concerts and shows that have bypassed the area in the past. Some touring groups, she says, are too large for current facilities in the area.

“Take the [rock singer] Pink, for example,” Kilmer says. “When she tours, she has 30 tractor-trailers and props that weigh over 130,000 pounds. She can’t come to an indoor facility in this region because none can handle her type of production.”

ESG became interested in the arena idea five years ago when the NBA’s Sacramento Kings considered moving to Virginia Beach. “They approached the city and looked into building an arena,” says Harris. “The Kings decided not to pursue Virginia Beach as an option.”

The cost of building an arena would have put a heavy financial burden on the city. But the team’s interest proved that the market could support a sports franchise. “I think that effort encouraged ESG to move forward,” Harris says.

In 2013 the company began examining a possible arena project in earnest. “We asked ourselves: Can you privately develop an arena and make it feasible?” Kilmer says.

The company met with a group of visiting Chinese businessmen to see whether it could work with a Chinese bank as a lender for the project. “We came up with a new model,” Kilmer says, noting that the company secured funding from the Export-Import Bank of China. “We told the city we will build it, finance it and operate it, but there are certain incomes we want to capture to help underwrite the infrastructure.”

Thus far, one of the most challenging issues has been explaining why a private owner would construct, own and operate a facility normally owned by a municipality.

“This is a new model for developing a ‘public’ facility without a national sports franchise,” Kilmer says. “We are motivated differently than a municipality to make the venue successful and solve operational challenges that arise as we do not have the authority to raise taxes to make up a shortfall but must remain creative in solutions so we can continue to employ area citizens, provide entertainment opportunities and give back to our hometown.”  

ESG pulled in a mix of international and local team members for the project. They include CMEC, an international design, engineering and procurement specialist; Mortenson Construction, a national contractor now ranked as the second largest builder of sports facilities in the nation; Virginia-Beach based contractor S.B. Ballard Construction Co.; AECOM, an international architectural, engineering and design consultancy firm; Clark Nexsen, a local architecture, engineering, planning and interior design firm; and SMG, a venue management, marketing and development firm.

“They were all involved before the proposal went to the city last year,” says Kilmer. “They believe that this could possibly be a model that could work across the country.”

The arrangement is attractive to the city because “it’s privately funded and puts the financial burden on the private sector to reach its financial goals,” says Harris.

A key win

Lidl, a Germany-based discount supermarket chain, is making headway in Virginia, just months after announcing plans to establish its U.S. headquarters in Arlington County.

The company, which operates nearly 10,000 stores in 26 European countries, is moving into its Arlington offices and has broken ground on a regional headquarters and distribution center in Spotsylvania County. It also has purchased a 4.8-acre parcel near Chesterfield Towne Center as the site for its first store in the Richmond area.

The company is investing more than $200 million ($77 million in Arlington and $125 million in Spotsylvania) and has pledged to create 700 jobs in Virginia by 2018. Five hundred positions will be in Arlington. The other 200 will be based at the 82-acre Spotsylvania site, which is expected to open within two years.

The U.S. headquarters will occupy 217,000 square feet at the National Gateway I building in Arlington. It was built about five years ago but had no previous tenants. The company has spent $15.4 million on improvements to the building’s interior.

The county started discussions with Lidl in early 2014. Its main competitor was Charlotte, N.C. “Lidl was highly sought after, and the competition was very tough,” says Alex Iams, assistant director at Arlington Economic Development. “It would have been a prized win for any other community in the running. The most challenging aspect was also the most rewarding — putting together the perfect combination of a real estate site and incentive package to meet Lidl’s needs.”

The state incentives include $4 million in grants from the Commonwealth’s Opportunity Fund and $2 million from the Virginia Economic Development Incentive Grant program. The program awards grants to exceptional projects involving large numbers of jobs promising high wages compared with average pay for a particular area. The Virginia Jobs Investment Program will provide additional funding and services to support employee training activities.

Lidl said Arlington was a top contender for the project because of its location, public transportation system and young and highly educated workforce. These factors presented “an incredible opportunity for Lidl to launch its expansion in the U.S.,” Brendan Proctor, Lidl’s U.S. president and CEO, said in a statement.

Also important was Arlington’s real estate and incentives package as well as the county’s ability to meet Lidl’s timeframe, says Iams. “Additionally the project site benefited from many nearby conveniences and amenities — easy access to the entire National Capital region and close proximity to Reagan National Airport.”

The deal is expected to boost the county’s efforts to diversify its economy and lessen its reliance on the federal spending. “It will provide significant tax revenue and job creation benefits for decades to come,” says Iams.

Arlington Economic Development officials say the Lidl deal is the start of a robust effort to attract international business prospects. Last spring, the department co-hosted a reception for Chinese delegates to the Select USA Global Summit. Recently it was picked to be the sole U.S. host for the global Dongsheng-AC Bridge Entrepreneurship Competition. During the event, targeted early-seed technology companies from around the world competed for cash prizes, office space and access to investors.

“Companies from around the globe are looking for a U.S. base, and, as Lidl’s decision demonstrates, Arlington offers many of the location assets those companies seek,” says Iams. “Our workforce, proximity to the nation’s capital, and strategic location along the East Coast are very attractive, and we are actively exploring ways to enhance these global opportunities between Arlington and other markets.”

Triumphs and trials

While some localities in Southern Virginia felt good about 2015, others saw the year as the beginning of a rebuilding process.

Martinsville and Henry County had a strong year, pulling in investments of more than $21 million and adding more than 660 jobs. “We had a good mix of existing companies expanding and a new company,” says Mark Heath, president and CEO of Martinsville-Henry County Economic Development Corp.

The area, which has experienced chronically high unemployment, has diversified its economy during the past 10 years. “We are looking to bring in more high-tech and high-paying jobs,” Heath says. “Our key targeted industries include food processing, aerospace and plastics. We’ve also seen a resurgence of textiles and furniture, too. We will talk to anybody that can fog a mirror.”

Several existing companies expanded in 2015. Meat snack manufacturer Monogram Foods, for example, has completed a $7.2 million project involving the construction of a warehouse and distribution center in Martinsville, adding 101 jobs. That project has been completed. The project is Monogram’s third expansion since 2009. 

Also, eBay Enterprise invested $5.8 million in its 400,000-square-foot expansion in Henry County. The completed project will add 191 jobs, raising the company’s full-time workforce to more than 500.

Other expansions include a $600,000 project that added seven jobs at Solid Stone Fabrics and a $300,000 investment and 300 new jobs at The Results Co., a call center.

Martinsville-Henry County’s big win last year was the British company Hardide Coatings, which spent more than $7.25 million to open its North American manufacturing operation in Henry County. It expects to employ 29 workers within three years (see related story on Page 26).

The area, however, continues to face some recurring problems. “We need to find adequate numbers of skilled labor and adequate numbers of people willing to get new training for advanced manufacturing and advanced technology jobs,” Heath says.

He sees a trend across the Southeast in which new technology enables companies to hire fewer people in many industries. The workers who are hired have high skill levels.

“We have not done a good job in technology training over the years,” Heath says. “People are now realizing that, while a four-year degree is important, you also need people with two-year associate degrees and/or certifications. We need all of that. We need to rethink our educational and workforce capabilities. That’s what keeps me awake at night.”

Martinsville and Henry County are designing programs to meet local industry needs. As an example, the Center for Advanced Film Manufacturing was created for Eastman Chemical Corp. about two years ago. “Sixteen people have graduated and have gone on to work for Eastman,” Heath says. “We are also building training for eBay that has the same sort of platform but will be designed for their specific needs.”

Jeff Reed, the executive director of Virginia’s Growth Alliance, has the task of marketing Emporia and 10 Southern Virginia counties, a territory covering 4,400 square miles. He is optimistic about this year. “Spring is looking promising,” he says.

A number of companies in the region expanded last year. Microsoft Corp. invested $402.4 million in November to expand its data center in Mecklenburg County, a move expected to create 42 jobs.

Two other expansions involved companies in Charlotte County. Blue Ridge Railcar spent $2.4 million and will be adding 24 jobs, while custom cabinet manufacturer Corsi Group hired 32 employees last year and plans to add 110 jobs in the next few years. Corsi had invested $5 million to purchase a building and expand it in  2014.

The Foreign Affairs Security Training Center (FASTC), a foreign-service training center for the U.S. Department of State, plans to spend more than $400 million on a training facility at Fort Pickett in Nottoway County. “When fully operational in 2020, it would train 8,000 to 10,000 people per year,” Reed says.

A solar panel manufacturer, 510Nano, plans to spend $11 million creating a manufacturing facility in Greensville County, a project expected to produce 113 jobs.
Meanwhile Dominion Power’s new $1.4 billion natural gas-fueled power plant in Greensville  will create 45 jobs. “They are going through the federal regulatory process right now,” Reed says of Dominion. “They have applied for all their permits with the State Corporation Commission.”

The region still faces challenges, including lack of access to natural gas and broadband. “We have a great infrastructure for broadband, but the last mile continues to be a challenge,” Reed says. “We also have a lack of cellular service and access to capital. We are trying to nudge cellular providers to provide the latest connectivity, availability and range to our customers.”

He believes recent changes to the Tobacco Commission grant program will hurt the region. “They now require a dollar-for-dollar match. If they put up $100,000, we have to put in $100,000,” he says. “That will hurt us. We don’t have sources such as large foundations.”

Virginia’s Growth Alliance supports Dominion’s efforts to build a natural gas pipeline, the Atlantic Coast Pipeline, as long as the region has access to it. “About 210 miles will go through our region,” Reed says. 

About 90 percent of inquiries on potential industrial projects in the region require natural gas. “We don’t have any natural gas except for a few counties in the region,” Reed says.

Pittsylvania County spent last year improving its infrastructure. The county now has several industrial parks with broadband service. “At least three of our industrial parks have infinite speed, and that is pretty exceptional,” says Matt Rowe, the county’s economic development director. “We are fortunate to have gigabit-broadband pure fiber that goes to our parks. We are on the main fiber line that runs from Northern Virginia to Georgia.”

The county has many pad sites ready, ranging from 1 acre to more than 60   acres. “We are also working with Danville on pad sites of 100-plus acres in Berry Hill, a 3,500-acre industrial park. That’s an ongoing project,” he says.

Local training programs are a plus for the county and Danville. Last year the Gene Haas Center for Integrated Machining opened at the Institute for Advanced Learning and Research. The center, part of the Capstone Integrated Machining Technology project, is a partnership between the institute and Danville Community College. “It currently has 40 graduates, but in the next four years it will have 140,” Rowe says. “They will be gobbled up by a lot of employers.”

In Danville, longtime employer Telvista announced last year it has begun hiring 300 additional inbound call operators for a major communications company.
Last year saw the continued revitalization of Danville’s River District. The city had 17 announcements of new or expanded properties in the area, says Telly Tucker, the city’s director of economic development.

The Launch Place, which was funded by the Danville Regional Foundation with a $10 million grant to encourage entrepreneurial activity in the River District, now has several businesses operating in the district. “We anticipate significant growth in this activity,” Tucker says. “Danville will continue to pursue both traditional and nontraditional economic development activities.”

A meticulous search

Philip Kirkham had been CEO of Hardide Coatings for only a few months when a decision was made to create a facility in North America.

The search for a suitable site eventually led the company to Henry County.

The company, part of Hardide plc based in Bicester, England, is an advanced surface engineering business. Its patented technology and process create an extremely hard-wearing tungsten carbide coating used by a variety of customers.

“The types of parts we coat are typically components used in directional oil drilling tools and fracking tools, internal parts of flow-control valves and pumps for severe service applications in the chemical and oil and paint industries,” Kirkham says. “More recently we have started coating components for aerospace and have just been approved by Airbus.”

In 2013, North American customers represented about 20 percent of the company’s sales, and that figure has increased in recent years. Many customers on this side of the Atlantic wanted to do more business with Hardide but thought the company needed a North American coating facility. Meanwhile potential customers said they “would only deal with us if we were a local U.S. supplier as they didn’t want to get involved in export/import paperwork,” Kirkham says.

Kirkham, a former  executive vice president with Rolls-Royce, was heavily involved in that company’s decision to open a jet components  plant in Prince George County in 2010. “I knew from the analysis we did at that time that Virginia was a good place to do business, so I had a natural leaning toward Virginia,” he says.

Talks with Virginia representatives began in early 2013. Kirkham visited the Martinsville area as part of his tour with officials from the Virginia Economic Department Partnership. He met with Mark Heath, the president and CEO of Martinsville-Henry County Economic Development Corp., at the Paris Air Show in June 2013. “Over the next couple of years I visited him at his facility in the U.K. twice,” Heath says.

Heath was impressed by the company’s process in choosing a site. “They are very thorough in the way they go about things,” he says.
Kirkham investigated locations in a number of states, including Texas, Oklahoma and North Carolina in addition to Virginia. The company’s list of requirements included an existing building that would allow expansion, a stable local workforce, access to educational resources for employee training, a good road transportation system, proximity to airports, and a sufficient and stable supply of electricity.

Martinsville-Henry County met most of the company’s criteria. “Mark and his team made us feel very welcome there,” Kirkham says. “Nothing was too much trouble and they were (and still are) helping in every aspect of us relocating and starting up in business.”

The company leased a 20,000-square-foot building in Henry County after Kirkham met with Gov. Terry McAuliffe and Maurice Jones, Virginia’s secretary of commerce and trade, at the Farnborough International Airshow near London in July 2014. “That’s where we sorted out the finishing touches to the deal,” Kirkham says.

Hardide Coatings invested $7.25 million in the Henry facility and plans to create 29 jobs with an average salary of $50,000 during the next three years. Economic incentives offered to the company included a $150,000 grant from the Commonwealth’s Opportunity Fund and $170,000 in Tobacco Region Opportunity funds.

Martinsville-Henry County Economic Development and Henry County contributed $450,000 to offset the company’s moving costs and building renovations. “We felt so good about it being one of our targeted industries,” Heath says. The company is also eligible to receive state benefits from the Virginia Enterprise Zone Program.

Hardide hired its first two senior employees at the facility last spring. They spent four months training in Britain.

“We are currently in the process of recruiting another four production operatives,” Kirkham says. “The plan is to grow the business by attracting new customers and also to transfer some of the U.S. customers’ work currently done in the U.K. over to Martinsville.”

Mixed results

Northern Virginia localities ended 2015 with mixed results, with some reporting record economic growth while others had marginal gains.

Loudoun County was one of the region’s big winners. “We have more overall business investment — more than $1.4 billion in 2015 — than anywhere else in Virginia,” says Buddy Rizer, executive director of the county’s department of economic development. “We have a lot to be proud of.”

Last year, the county recruited or retained 61 companies. They are expected to create or retain 2,757 jobs and fill more than 3.6 million square feet of commercial real estate space.

Almost one-fifth of the county’s workforce is employed in the high-tech industry. Loudoun continues to have the largest concentration of data centers in the commonwealth. Carfax, which produces vehicle history reports, said last year that it will invest $10.8 million to upgrade its data center operation in Loudoun.

Carfax also will invest $5 million in expanding its headquarters in Fairfax County, creating 120 new jobs.

One of Loudoun’s biggest wins involved Geico’s decision to spend nearly $6 million to build a national training center in the county. The 32,675-square-foot building, which opened in October, replaces the company’s previous training facility in Tysons. Geico is expected to create about 35 jobs in Loudoun within five years. The facility will train about 35,000 Geico claims adjusters from around the country each year.

Loudoun also continues to see growth in all of its industry targets. The county’s mix of businesses includes health analytics, personalized medicine, aviation and aerospace. “The momentum has given us confidence going forward,” Rizer says. “What makes me most excited is that the numbers are amazing, especially when you look at new investments, new jobs and startups. Loudoun County is really happening.”

Because of its diversity, the county is “less dependent on the federal government than any jurisdiction in Northern Virginia,” Rizer says.

Last year Loudoun hired a business development manager to coordinate its efforts overseas. “We have really seen the growth of international [activity],” Rizer says.

Fairfax County had a transitional year in 2015, moving from marginal growth to an upswing in jobs and more companies looking at the county.

The growth of office space around the county’s five new Metro stations — four in Tysons and one in Reston — led to increased vacancy rates. “We have seen a great deal of high-rise construction around those stations,” says Gerald L. Gordon, president and CEO of the Fairfax County Economic Development Authority. “That happened at a time when we already had a lot of vacant space.

We now have about 20 million square feet vacant. We have a lot of space yet to fill. That has been our biggest challenge.”

One of the county’s high points occurred when Inova Health System took over the Exxon Mobil campus in the Merrifield area to house the Inova Center for Personalized Health. “This campus will make Fairfax County a hub for world-class research and the commercialization of ground-breaking discoveries,” Gordon says. “New companies will grow as a result, and more world-class researchers and businesses will want to be here.”

The new facility helps diversify the Fairfax economy, something the economic development authority has been working toward for several years. “This is the magnet we needed to grow the translational medicine industry in Fairfax,” Gordon says. “It will attract worldwide attention.”

Last year Fairfax heightened its focus on new industries such as translational medicine, cybersecurity, cloud computing and data analytics. “We have created new positions to pursue those businesses,” Gordon says.

Arlington has started to stabilize its vacancy rate, which dipped at the end of the third quarter last year. It was the first time the rate has dropped appreciably in more than five years. The current rate sits at 21 percent. “Companies are starting to move back to Arlington and backfill some of this space,” says Christina Winn, director of the business investment group for Arlington Economic Development.

Through October the county closed 30 deals, which are expected to create or retain nearly 3,000 jobs and more than 800,000 square feet of office space. One of its biggest wins was an announcement from Lidl, a Germany-based discount supermarket chain, that will invest $77 million in establishing its U.S. corporate headquarters in the county (see story on Page 22).

The Arlington County Board also approved plans to transform Ballston Mall into Ballston Quarter with shops and a new, mixed-use residential building. The county will invest approximately $55.5 million in the $317 million project in a public/private partnership with Ohio-based Forest City Enterprises, owner of the Ballston Quarter sites.

Other wins involved GW Medical Faculty Associates, the largest independent physician network in the Washington, D.C., area with more than 750 health-care providers. It is relocating one of its offices from Washington to Arlington, occupying 50,000 square feet of office space. It is expected to create more than 200 jobs in its first year at the new site.

The American Diabetes Association moved its headquarters back to Arlington’s Crystal City from Alexandria, taking 78,000 square feet of space for its 300 employees. Also moving into Crystal City was the global startup incubator and seed fund 1776.

Prince William County also is attracting new businesses, breaking its records for capital investment and job creation. Last year capital investment totaled more than $500 million for the fourth consecutive year and for the fifth time in the economic development department’s 19-year history of operations.

The 13 projects closed by the department represented $666 million in capital investment and the promise of 480 new jobs.

“Prince William County is hot,” said Jeff Kaczmarek, executive director of the department of economic development. “The county’s growth is owed in part to its strategic location and excellent competitive edge. We have a ready supply of highly educated young professionals, affordable and available land and competitive labor costs, all of which result in a strong value proposition within the Greater Washington, D.C., metropolitan area.”

Ventech Solutions Inc. selected Prince William County as the site for its regional innovation, operations and engineering (IOE) center. The IT company plans to invest more than $1.5 million, creating 200 jobs with an average salary of $80,000 a year.

RiVidium Inc., an information technology and human resources support business, expanded in the county, doubling its workforce from 30 to 70 employees and adding 1,500 square feet.
In addition, the county elevated its branding and exposure internationally by hosting the Quicken Loans PGA Tour at Robert Trent Jones Golf Club in Gainesville. Twenty-one million viewers tuned in to watch the tournament.

Jefferson Lab is one of two contenders for collider

Jefferson Lab in Newport News hopes the U.S. Department of Energy will give it the go-ahead to build a $1 billion electron-ion collider.

The facility, formally known as the Thomas Jefferson National Accelerator Facility, is one of two vying for the project. Brookhaven National Laboratory in New York is also a contender.

A collider is used by researchers to understand what lies inside a nucleus and what holds it together. “It’s a fundamental knowledge that may have no practical importance for 100 or 200 years,” says Andrew Hutton, associate director of the accelerator division at Jefferson Lab. “It’s pure long-term research.”

“At Jefferson, we have an electron machine and would like to add an ion complex. In Brookhaven, they have an ion collider, and would like to add an electron complex,” Hutton says.  “We see this as our future, and they see it as their future.”

The Department of Energy is expected to take three years to make its decision, but preparations in Newport News already have begun. The city will provide land for the Jefferson Lab to expand and “to build the electron-ion collier should that [bid] be successful,” says Newport News City Manager Jim Bourey.

The collider project construction would cost about $1 billion, he says. The city expects the economic impact for the region will be approximately $4 billion, with the creation of more than 4,000 jobs, most of them in construction or skilled labor positions, over 10 years.

The city owns half of the 16 acres that would be provided for the lab for its expansion. The remaining half is owned by the Newport News school district, which now has an operations and transportation service center on the property. It would be relocated.

About 1,400 scientists from around the world do research at the lab, helping to boost the local economy. “They live here when they do their research,” says Robert McKeown, the lab’s deputy director for science.

Newport News’ technology sector is on an upswing. “One hundred thirty years ago, Newport News was on the map because of the shipyard [now known as Newport News Shipbuilding]. Now people look at it for Jefferson Lab and high technology,” Hutton says, noting an accompanying change from a blue-collar to a more high-tech workforce. “My job is to make sure Virginians are proud that we are here.”

Valuing the individual

Marathon Consulting’s four owners were seasoned information technology professionals when they started the company in April 2006.

“All four of us worked together for a large consulting company in Virginia Beach,” says company President Harris Pezzella. “We had talked about taking advantage of an opportunity when it presented itself, and it did present itself. That allowed us to start Marathon.”

The opportunity came when one of the larger information technology providers in Hampton Roads left the area, creating a void for IT services.

The startup period had its challenges. “We were subject to a one-year non-compete as stated in our employee agreement,” Pezzella says, referring to an agreement with their previous employer. “Consequently, many of the business relationships we had forged over the previous decades were initially unavailable to us when we started.”

The four owners – Pezzella, Tony Cortinas, Ben Ricks and Al Moore – self-funded the business and received a line of credit from the bank. “That being said, Marathon was profitable from almost the very beginning,” Pezzella says.

They also served as the company’s only staff in the beginning. “Now we have about 70 employees,” Cortinas says. “We started with only four clients, and now we have served over 200 clients.”

The Virginia Beach-based company provides IT consulting and digital marketing services to mid-tier businesses, nonprofit organizations and local governments in the mid-Atlantic region. “We supplement our clients’ technical needs,” says Pezzella.

The company is expanding to Richmond. “We have one employee in Richmond now, and we are recruiting for a couple of spots,” Cortinas says. The office is the company’s first outside of Virginia Beach.

Marathon was ranked No. 466 on the 2010 Inc. 500 list of fastest-growing private companies in the U.S. This year it was No. 4,916 on the 2015 Inc. 5000. The company has been on the Inc. list every year since it reached eligibility.

Now it is the top-ranking small business in the Best Places to Work in Virginia.

Pezzella says the company has thrived because of its employment practices. “Marathon is a consulting company founded by consultants that value the individual,” Pezzella says. “We have built the company around top-notch consultants who have great soft skills for building rapport with our clients. Their values reflect the values of Marathon.”

The company’s benefits package also is a draw for employees. Marathon pays the entire health-care premium for each employee. It also pays 15 percent of dependent coverage. A wellness benefit allows employees to expense up to $250 a year for anything related to personal health such as a gym membership or exercise equipment.

Employees additionally receive overtime plus 10 percent when their hours exceed the normal workweek. “They also have the ability to carry over vacation or cash out some vacation if they need to,” Pezzella says.

The company’s turnover rate hovers around 10 percent. “That is extremely low for our industry,” says Cortinas. “In our industry, it can be as high as 50 percent or above.”

After a year of service, employees are eligible for one week of training that can include a conference. It also provides internal technical sessions presented by the company’s own consultants. “Our staff is made up of experts, and this gives them the opportunity [to present papers at conferences],” Pezzella says.

To further its focus on training, Marathon promoted one of its senior staff members to professional development coordinator. “We did that as much as anything to help us make good on our promise and our wish to help folks develop technically and professionally along the way,” Pezzella says.

Each year the company offers family events outside of the office that include tickets to a Norfolk Tides baseball game. It additionally holds barbecues on Friday afternoons and sponsors an annual bus trip for employees to either Oriole Park at Camden Yards in Baltimore or Nationals Park in Washington to see major league baseball games.

“We also hold quarterly all-hands meetings where we share our goals financially and operationally,” says Cortinas. “We report on those goals. We share that type of information from day one.”

The company’s founders have two important tenets: respect employees as individuals and help them evolve professionally. “Don’t underestimate the value of the people who make up your company,” Pezzella advises. “Leadership starts with example. Everyone is worthy of respect.”

Best Places to Work 2016 list of small employers

Keeping its culture

Defense Point Security and the hit television show “The Big Bang Theory” have something in common: mobile virtual-presence robots.

“We’ve taken a unique approach to our corporate culture by creating virtual connection cameras – virtual presence robots – at both of our offices in Herndon and Alexandria,” says company CEO George McKenzie.

“We have people scattered in a lot of states. This is like a portal into the other office. It’s a way to maintain a break room feel. The virtual presence helps because people don’t feel isolated.”

Employees can log into the robot – a tablet on a moveable base – and drive it into a conference room. The robot moves about the room, focusing on the person who is talking. “I think there may be some apprehension about talking to a face on a stick at first, but five minutes into the meeting, you don’t notice it any more,” McKenzie says. “We have been looking at the robot for a while. When we opened our second office in Herndon last summer, there was a genesis for doing it.”

The company’s services range from security engineering to incident response. One of its specialties is digital media analysis (computer forensics), which provides timely information to help determine whether a security incident has occurred.

The growing company last year ranked No. 1 among small businesses in the Best Places to Work in Virginia. This year it is the top-ranked company among midsize businesses.

The company opened the Herndon office when it began outgrowing its 3,500-square-foot space in Old Town Alexandria. Employees are allowed to work from whichever location is closest to their home. “Instead of adding on additional space, we are putting up satellite offices closer to our employees,” McKenzie says. “We will be opening more of these around the country.”

In 2015, the company won a couple of new federal prime contracts and also landed new commercial customers. “That was a big one for us,” McKenzie says, noting that the company has worked with commercial customers in the past, but the projects were “more transactional. Now we have full-time commercial services customers that are buying services from us on an annual basis.”

Customers include the Centers for Medicaid & Medicare Services and the Department of Homeland Security. Defense Point opened an office in Chandler, Ariz., in 2014 to support Immigrations and Customs Enforcement (ICE).

The company partners started it with their own money. “We started small and worked our way through,” McKenzie says. “We did it on our own.”

As the company grew, he and his partners decided to try outsourcing some recruiting in an attempt to score more candidates. But they soon realized that outsourcing was not feasible. “We have a rigorous recruiting process, and they don’t have the same drive and understanding so we brought it back in-house,” McKenzie says.

The firm currently has 150 employees. Two of its biggest challenges are preserving the corporate culture while it expands and recruiting and maintaining talent while ensuring quality. “It has taken us a lot of learning experience to get here,” McKenzie says. “You can’t just go out and find a cybersecurity specialist. It’s a high-demand industry with very little unemployment. So how do we differentiate our company to attract the talent we want?”

He believes the company’s focus on treating people well and establishing a community of talented professionals is the answer. “We are not just a company. We are a family, a community,” McKenzie says. “That has benefited us greatly.”

The company ranked No. 1,291 on the 2015 Inc. 5000 list of fastest-growing private companies in the U.S with a three-year growth of 323 percent. Defense Point also was listed in Washington Business Journal’s 50 Fastest-Growing Companies and as one of the Washingtonian’s 50 Best Places to Work.

The firm pays 100 percent of the premium for medical insurance for employees and their families. Other benefits include additional paternity and maternity leave, an in-house gym, 24-hour access to the company’s computer lab area, which is open seven days a week, and free LifeLock, a service that monitors credit cards and credit scores.

As part of its ongoing training, Defense Point holds study groups for a variety of certifications, including Certified Information Systems Security Professional (CISSP), Certified Ethical Hacker (CEH) and Program Management Professional (PMP).

Being passionate about your work is an important key to success, McKenzie says. “If you are just chasing a dollar, you will find it very difficult. You have to be living, breathing experts in what you do. Don’t chase work that may not be in your lane. Stay true to who you are and focus on who you want to be. Early on people came to us and offered us work out of our discipline. It was difficult, but we were true to our selves and turned it away.”

Best Places to Work 2016 list of midsize employers

Employees are the owners

Burns & McDonnell, an architectural, engineering and construction services company, takes pride in being employee-owned.

“One hundred percent of our employees own 100 percent of the company,” says Jeff Ganthner, company principal and mid-Atlantic manager. “We give all of our profits back to the employees. It gives employees more incentive to stay and be loyal to the firm.”

Because they are owners, employees can see how their work directly affects the company and its clients. “It’s a great motivator for employees,” Ganthner says of the business model. “They are fully invested and vested in the company.”

Employees earn a salary throughout the year and split the profits at year’s end in the form of substantial bonuses. “People get excited at the end of the year,” Ganthner says. “Everybody gets a profit, from the receptionist to the CEO.”

The company’s employee-owned status allows it to pay about “30 to 40 percent above marketplace to attract the best talent,” Ganthner adds. “It’s a neat model.”

Prospective employees weren’t thoroughly sold on the bonus plan when the firm opened its first Virginia office in Chesapeake in October 2010.  They were wary because  some companies that promise bonuses don’t follow through.

“We go to great pains to make sure we are consistent with bonuses,” Ganthner says. “We treat bonuses as an expense monthly so we have the money available in December. We had to get people over the hump that first year so they understood that this is for real.”

Based in Kansas City, Mo., Burns & McDonnell was founded in 1898. Its growth began taking off in 1986 “when it went from a partnership to employee-owned,” Ganthner says. “We’ve had phenomenal growth since that time.”

The company’s architects and engineers work on projects as a team. “We provide soup-to-nuts design and every kind of engineering work,” Ganthner says.

In 2015, the company achieved a record $2.5 billion in revenue, hired its 5,000th employee and broke ground on a 450,000-square-foot expansion of its headquarters in Kansas City. The expansion is scheduled to open this spring.

More than 80 of the company’s 5,400 employees work in Virginia where it now has offices in Roanoke and Richmond in addition to Chesapeake. Ganthner believes the Virginia offices will grow to 150 employees in 2016. “By 2017, we will take it up to 200,” he says, noting that the overall company grows 10 to 12 percent in both employment and revenue each year.

In addition to its top ranking among large businesses on the Best Places to Work in Virginia, the company ranked No. 15 on Fortune’s latest list of 100 best employers. “We have been in the top 20 for the last five years,” Ganthner says.

In 2014, the company received a national award of merit in the industrial/process/research facilities category from the Design-Build Institute of America for its work on the Rolls-Royce Advanced Aerofoil Machining Facility in Prince George County. “We do about 150 different projects a year in Virginia,” Ganthner says.

Burns & McDonnell opened its Chesapeake office during the throes of the Great Recession. “We tried to go the construction route right out of the gate, but it wasn’t successful so we focused on design services for the federal government,” Ganthner says. “We went with what was working for us at first but didn’t give up on things that weren’t working. We stuck with it. Now we have success in all areas. We are doing design and construction throughout Virginia.”

Throughout the year, the company hands out MacCulture Awards for which employees nominate outstanding co-workers. Virginia employees have received these awards several times each year, Ganthner says. “[The awards] are random. People don’t know when they are coming.”

The company works with a variety of charitable organizations such as Ronald McDonald House Charities and Habitat for Humanity. “When we got new office chairs in Chesapeake, we had the old chairs professionally cleaned and donated them to a local school in Norfolk. Our employees delivered them,” Ganthner says. “The school was thrilled to get them.”

Each year the company holds employee events that can range from a pancake breakfast to a day of sailing. “October is Employee Owner Month, and each week has a different theme,” Ganthner says.
Giving employees a piece of the action is a smart idea for any company, he adds. “Let your employees become owners. You will be a place that people will want to come to work for. The company will grow faster.”

Best Places to Work 2016 list of large employers

Soon to open

During the next two years, Virginia will see the opening of many highly anticipated hotels. Several of the projects are located in Hampton Roads, although the Shenandoah Valley also is getting a new high-end hotel and conference center.


One of the most high-profile projects is the The Main Hotel and Conference Center in downtown Norfolk.  “I think this project will give Norfolk a sense of arrival onto the scene as a significant urban city,” says Michael Woodhead, vice president of marketing for developer Gold Key PHR Hotels and Resorts. 


The Virginia Beach-based company also is in the midst of “what has become a roughly $75 million renovation” of the historic Cavalier Hotel, one of the resort city’s most iconic properties which.0 dates back to the 1920s.  “It will experience a complete renaissance and return to its original splendor,” says Woodhead.


“The hospitality and tourism industries are excited for the investment dollars coming into the state, something Virginia hasn’t truly seen since the economic downturn in 2008,” says Eric Terry, president at Virginia Restaurant, Lodging & Travel Association. “New hotels and renovations are sure to help the hotel and tourism industry in 2016 and beyond.”
The new projects include:

• The Main (Hilton Norfolk at The Main and The Exchange at The Main) —Currently under construction, the hotel and conference center at the corner of Granby and Main streets is scheduled to open in March 2017. The project is a public/private partnership involving the city and Gold Key PHR Hotels and Resorts. Norfolk will own and pay for the conference center and a parking garage, and its contributions already have exceeded $100 million, according to published reports.  Gold Key will fund about $65 million. The full-service, upscale 23-story Hilton hotel will have 300 guestrooms and three food and beverage offerings.


• The top floor will be dedicated to the Empyrean Level Club, a luxury five-star hotel within the hotel. “It will be a notch above,” says Woodhead, noting that the rates are different than a standard room and that rooms are available to anyone, not just Hilton Honors members. The Exchange conference center will include a secure meeting room and the region’s largest ballroom, with space to accommodate up to 1,500 people.   The property also will offer a rooftop garden and lounge overlooking the Elizabeth River.


• The Cavalier Hotel in Virginia Beach — Currently undergoing a $75 million renovation, the hotel is on the National Register of Historic Places. Gold Key is rebuilding guest rooms, making them larger and more luxurious. In the process, the number of rooms will drop from 110 to 87. The hotel, which is going for a five-star rating, will be branded as a member of Marriott’s luxury Autograph Collection of boutique hotels. It’s scheduled to reopen in late 2016 or early 2017.


• Marriott in Virginia Beach — Gold Key is in the development phase of an upscale, full-service, 300-room Marriott across from The Cavalier on Atlantic Avenue. The hotel is scheduled for completion in 2018.


• Hyatt House Hotel in Virginia Beach — Armada Hoffler Properties is building this hotel, located in the heart of the city’s oceanfront at 27th Street and Atlantic Avenue. The $100 million, 19-story, extended-stay hotel will include 156 rooms. The hotel will include meeting spaces as well as resort amenities. The company also is building a six-story parking deck across Atlantic Avenue that also will house ground-floor retail space that fronts Pacific Avenue. The $77 million project is targeted to open in the first or second quarter of 2017.


• Virginia Beach Resort Hotel and Conference Center —The all-suite hotel is currently undergoing a $2.5 million renovation that includes carpeting and floors in all of its 295 guest suites.


• Hotel Madison and the Shenandoah Valley Conference Center in Harrisonburg — A public/private partnership, the hotel is located on land owned by James Madison University. The 230-room hotel will be privately owned and operated by dpM Partners in Maryland. The principal of the company, Paul Gladd, is a JMU alumnus. The JMU Foundation will own the conference center. Construction should begin in March and completion is scheduled for September 2017. The hotel is expected to cost about $34 million, and the conference center $10.9 million.


• Downtown Richmond hotels — Shamin Hotels in Chester recently opened the 144-room Hampton Inn & Suites Richmond-Downtown and a 100-room Homewood Suites by Hilton Richmond-Downtown in an 18-story office building at 700 E. Main St.